JAKARTA (TheInsiderStories)—Industry Minister Airlangga Hartarto proposed for an additional US$185,2 million (Rp2.57 trillion) in the 2019 state budget to support the government’s program on fourth industrial revolution (Industry 4.0).
Hartarto in a press release on Thursday (07/06) said the budget will finance the implementation of “Making Indonesia 4.0” roadmap including development of five priority industries, enhancing the human resources through vocational education, Santripreneur program, and to push entrepreneurship.
The Ministry of Industry proposed the additional budget to the House of Representatives Commission VI on Tuesday (5/6). In conclusion, the Commission VI understand the proposed additional budget, so that the ministry budget will increase to Rp5.3 trillion from initial proposal of Rp2.73 trillion. In the same meeting, Commission VI also pushed the Ministry of Industry to optimize the budget absorption in 2018 amounting Rp2.84 trillion.
“Making Indonesia 4.0” becomes a guideline to realize national aspiration, which is to make Indonesia into the top 10 strongest economies in the world by 2030. Indonesia set an ambitious target in the “Making Industry 4.0” roadmap that launched in early April 2018. The implementation of Making Industry 4.0 expected to drive Indonesian economic growth of 1-2 per cent per year from currently in the range 5 to 7 per cent in 2018-2030.
Furthermore, manufacturing sector projected to contribute around 21-26 percent of GDP by 2030. Indonesia targeted to improve the ratio of net export to GDP from 3 percent to 5-10 percent and create 7-19 million employment in both manufacturing and non-manufacturing sectors by 2030.
The government will prioritize five industries in the Industry 4.0 roadmap namely foods and beverages, textile, automotive, electronics, and chemical. These five sectors contributed to the 60 per cent of Indonesia’s gross domestic product (GDP), 65 per cent of total exports, and 60 per cent of employments.
The roadmap also relates to taking advantage of Indonesia’s demographic bonus by creating skilled labors to meet industry demand. Indonesia is expected to continue to be dominated by population in productive age groups for the next fifteen years. Currently, the government involved 618 companies and 1.735 vocational secondary school in this program.
Indonesia should put more effort in Industry 4.0, considering the country is lagging behind Southeast Asia peers on implementing industry 4.0.
Singapore clearly leads the ASEAN countries in terms of initiatives for comprehensive Industry 4.0 strategy focusing on capability development, industry transformation, and re-skilling workforce. Singapore is among the 25 countries best positioned to benefit from Industry 4.0, according to a report from the World Economic Forum. The country planned to invest SG$3.3billion over four years for research and development in advanced manufacturing and engineering and allocate SG$4.5 billion to develop individual transformation roadmaps for 23 industries across 6 clusters.
Thailand and Malaysia also already become a leader in the legacy initiative to improve fourth industrial revolution. Thailand already entered early stage implementation of Industry 4.0 in 2016 and created a fund of 280 million baht to sponsor and support local startups. Malaysia already has an agreement with Chinese and German investors for investments in robotics and manufacturing.